Page 7 - Introduction to investing in Gold

The Beginner's Guide to Investing in Gold
To be honest, I thought I was pretty successful. "All that and a cup of tea”. Turns out – I wasn’t.
I was a director of one of the world’s largest private companies in my 30s. Anyone looking in would have been impressed. But they didn’t see my pension statement – I kept that to myself.
On the face of it, it didn’t look too bad. But there were an awful lot of assumptions. One was about inflation, and let’s just say it was LOW. But I didn’t care. Inflation was low, and retiring was a long way away.
Fortunately, twelve years ago, I did a bit of maths.
The question was really simple: what happens to my pension if we get inflation? I crunched a few numbers (I can be a bit of a nerd), and things got really depressing.
I assumed an inflation rate of 8% over ten years, and the present value factor was 0.463. Playing with the numbers, I started with a pension pot worth £1,000,000.
Bear with me; this is the boring bit. If you multiply that pot by the present value factor (if we get 8% inflation for ten years), in today’s money, that pot would actually be worth about £463,000.
Scary, eh?
It gets worse.
If you apply an annuity rate of 5.75%, that would give me an income of £26,623 a year (assuming I retired at 60).
2